Crypto Hierarchy Pyramid: The Higher You Go, the Higher the Returns
Cryptocurrency works in layers, it’s like a classic pyramid. The higher you are in the hierarchy, the more lucrative the returns. You, or the retail investor, are at the bottom of the pyramid. Here’s how it works.
Layer 1: You, the Retail Investor
Naive and trusting, retail investors are often abused and exploited. They are lured into the game with the promise of 100x returns. Few achieve this, and those who do, quickly lose everything in the crypto gamble due to their newfound greed. This is the crypto base layer. It feeds and sustains all the higher layers. When VCs make 1000x returns on one of their investments, that money came from the retail investors
Layer 2: KOLs and Media
They may be sponsored by any of the higher layers of the pyramid to promote narratives that are not in your interest. That new token could very well be a copy-paste project from the last cycle with a new name. Don’t be fooled, always do your own research. Most memes are like this. Media companies may also work with a KOL or a group of KOLs to create spontaneous engagement around a token or topic as a whole, which is nothing new. Crypto protocols and VCs have marketing budgets and they will take advantage of this
Third Layer: Crypto Protocols and Development Teams
The most honest developer was Satoshi Nakamoto. Everything after him was distorted. That's why there are more than 13,000 altcoins in 2024. 99% of them are shameless money-making behaviors, with no technology or innovation, and most are hyped to make money from retail investors
Fourth Layer: Venture Capitalists
These are the tycoons in the crypto space, they have money and power and control everything. They can push up or down the market, exchanges and even kill tokens. They also promote the development of crypto casinos by investing in new projects proposed by various crypto developers. They are the ones who drive the bull market to start, and they are the ones who sell when the market hits new highs
Fifth Layer: BlackRock and the Federal Reserve
BlackRock recently joined the crypto space in a public way through their Bitcoin ETF. Privately, they have been deeply involved in this field for many years through venture capital, and have been privately (and mostly secretly) accumulating Bitcoin using their Bitcoin Private Trust Fund. It is inevitable that they will go public. They have traditional finance, and cryptocurrency is their latest expansion.The role of the Fed is quite simple, they print dollars whenever and wherever they need to, they decide when the market will boom or collapse, we are victims of their decisions, we have no right to influence or prevent those decisions, they act as the king of the pyramid as they please
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